A balanced investment portfolio must also have a fair share of property investment. It offers real-world benefits along with low risk and medium to high returns in the long term. Since properties are not traded on any exchange, they grow slowly but with stability. Due to the growing property demands, the investment is quite liquid. The commercial real estate of the UK has grown quite a bit in the last five years, along with the residential real estate also witnessing stable returns. Let’s look at the UK property investment opportunities available right now!
Benefits of investing in properties
- Property investments are less volatile
- Investors can earn a rental income if you give your property to tenants
- It helps in capital growth as property increases in value every year
- It is a non-depreciating asset
- Capital gains when you sell the property after five years or more are larger
- Offers long term security
- There are several tax advantages with property investments
- Enables investor to leverage funds
- Protects investors against inflation
- Helps in portfolio diversification
Past performance of the UK property sector
Since the 1980s, the UK housing sector has grown over 308%, whereas the UK stock market has only seen a 228% growth in comparison. This proves that the property sector is as beneficial, if not more, than other financial markets in the country. An annual return of around 2% is averaged if you started to invest in the UK property market in the 1900s.
In November 2021, the UK witnessed a record-breaking high in housing prices when it increased by over 16,000 pounds. The property portal also said that the house price growth for the year was around 7%, with the average house price coming to be 2,408,000 pounds.
Mortgage lending from 1980-90 saw tremendous growth, which has continued to push the UK house prices ever since. Every year, the UK property appreciates by around 8% or more. The real estate residential industry in the UK is as big as GBP 251 billion.
Things to consider whilst looking at UK property investment opportunities
1- Capital
Cash is one of the biggest factors that play an important role to decide how much should you invest in property. Real estate is a big-money business, especially if you are thinking about investing directly. You must have at least double the amount of the property as cash in hand to start direct property investing. However, if you are beginning to invest in properties virtually, through stocks or other mediums – the investment required can be as low as 100 pounds.
2- Risk
Property investing is not too risky but lets be real; investing comes with risk. Understanding your risk appetite and how much you can afford to lose is important before making such big investment decisions. Even the top one per cent of the investors only invest around 20% of their money in property and leave the rest towards other investments arenas.
3- Time
You can either be an active, passive or mixed investor. If you have the time to become an active property investor, you will have to buy the place, maintain it and manage the tenants – all on your own. However, if you do not have that kind of time in hand, you can hire professionals who will do the needful on your behalf of you. All you have to do is pay for the property of the maintainers and enjoy the income and profits later.
4- Liquidity
Liquidity states how easy it is to convert an investment into cash. You must know how much and how quickly you can. Need money in the future. If you invest in properties traditionally, liquidating a property immediately might be tough since to sell off the property at the desired rate consists of a robust search for a buyer who is willing to pay the desired amount.
However, if you invest in properties virtually, through exchanges, like REIT funds, you can easily sell them off at any point in time to liquidate the investment into cash.
So, according to your needs, choose wisely – if you wish to invest in physical property or property related funds.
Final words
Buying a property for the medium to long term in the United Kingdom is definitely worth the money. With the constantly increasing prices of properties in the country, it is considered a safe bet. However, if you only want to lock in your money for the short run, investing in properties might not be the best decision, as profits are only seen when you hold onto the property for at least five years. Not only residential properties, but you can also invest in commercial and industrial properties or raw lands since their value also tends to increase with the passing time. All in all there are some great UK property investment opportunities, so now really is the right to start looking at investing!
If you would like to learn more about UK property investment opportunities or other ways to invest your money, request an introduction to a financial professional. Click the link below.
